HP or Dell: Which Way Should 3PAR Go?

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HP has trumped rival Dell's bid for 3PAR and sparked a bidding war for the cloud-based virtualized storage company. Either tech giant would benefit from acquiring 3PAR, but the question before 3PAR and its board of directors now is which company offers the better value and more promising future for 3PAR.

Dell's 3PAR bid is almost half a billion less than HP's, but that doesn't mean it's not a superior offer per se.
The HP bid is $24 per share, a 33 percent premium over Dell's bid of $18 per share. The 3PAR board and shareholders can't ignore an offer nearly half a billion dollars higher than Dell, but money is not the only consideration for choosing which suitor to go with.

Dell is scrappy and is aggressively working to gain ground in the server and IT services markets. Last year, Dell purchased Perot Systems for nearly $4 billion--a move mimicking HP's acquisition of EDS. Now, Dell and HP both have their eye on virtualized storage as a means of helping customers consolidate storage space and operate more efficiently.

HP has been focused on a spending spree of its own to expand its portfolio of products and services. Following the purchase of EDS in 2008, HP has added 3Com, Palm, and--most recently--Fortify to the family, and now it hopes to beat out Dell to acquire 3PAR.

In an HP press release, HP executive vice president and general manager of Enterprise Servers, Storage and Networking claims "HP's proposal offers superior value to 3PAR's shareholders. Our global reach, strong routes to market and commitment to innovation uniquely position HP as the ideal fit for 3PAR. We've seen great momentum with our Converged Infrastructure strategy, and 3PAR accelerates that strategy, particularly in cloud and scale-out markets."

According to data from IDC released in June, HP is compelling as a potential steward of 3PAR. It is number one in a diverse array of categories including worldwide server revenue, worldwide server shipments, blade server market, units of Microsoft Windows sold, and revenue generated from Microsoft Windows. In almost every one of those categories, the number two rival is Dell.

Bigger isn't always better, though. Sometimes being on top just means you're a bigger target and you have farther to fall. HP has been mired in the soap opera surrounding the scandalous departure of its CEO, and there are reports that Mark Hurd may have been so aggressive in cutting costs to improve share value, that he handicapped HP's ability to perform and deliver in the process.

The challenge for the 3PAR board of directors is to weigh the pros and cons of the offers from HP and Dell, and look beyond the financial details to determine which company offers the better long-term opportunities and benefits for the company.

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